The Dual Source Quandary

Are you really limiting risk or just limiting options?

One dynamic that has been a part of Supply Chain since the inception of volume manufacturing, is the decision on whether to use a sole source or dual source. A strategic analysis of RISK ASSESSMENT  that has become misused.

PlastiCert’s customers utilize both strategies, some are sole sourced, some are dual. But what is dual sourcing doing for them?

Numerous factors go into their decision, as to which sourcing philosophy to adhere to.

Single Supplier Sourcing Strategy means working with one supplier for a particular commodity or technology.

Pluses include: Simplified supplier management (better communication, coordination);

A stronger working relationship (technical support for design).

Increased leverage (pushing for pricing and delivery that accommodates your needs).

Minuses include: Dependance (disruptions in delivery or quality).

Pricing (inability to push back on increases).

Limited choice (possibly reduced options based on the new program being released).

The concept of dual sourcing has grown over the years. In my OEM years, we talked about dual sourcing for a common item. Getting the same thing from two different sources. The pluses and minuses above directly apply.

Currently, the concept has evolved to being utilized throughout the supply chain. At which point, the pluses and minuses start to get a little more clouded.

For injection molding, you require a mold to be designed and built to make production. In the concept of dual sourcing, do you PAY to have a duplicate mold designed and built at a second supplier? Few do, especially small to mid-size OEMS.

OEMS then dual source, but by commodity rather than by component.

From a risk mitigation standpoint does that really help you? You are still sole sourced for that component (or components).

From a risk assessment, how often is an ENTIRE plant shut down due to a catastrophic event? VERY VERY rare. Supply interruptions are typically due to raw material supply interruptions. Which will likely affect ALL your sources if you have spread your business around.

So, you have missed many of the plusses of working with a sole and very capable supplier, and not avoided the minuses.

If you are going to dual source, do it strategically. Based on capability, technology strengths, customer support.

Or work with a sole source QUALITY supplier that meets your needs, that can partner with you and actually be a member of your team designing and optimizing your product offerings, AND look out for your supply continuity through focused Risk Management.

Mitigating risk has an ROI. Let the numbers dictate your strategy and set up your company for success in the long term.

Give PlastiCert a call and we can have that discussion. Take advantage of the pluses and eliminate the minuses.